1. Introduction Founded by Jack Friedman, JAKKS Pacific “designs, produces, markets and distributes toys and related products, pet toys, consumables and related products, electronics and related products, kids indoor and outdoor furniture, and other consumer products” (Reuters, 2018). The company’s current CEO is Stephen Berman. Being a licensee to a number of well-known trademarks including, but not limited to, Nintendo and Star Wars, JAKKS Pacific remains a key player in the toys and related products marketplace.

2. JAKKS Pacific Vision and Mission

The mission statement of the company highlights three areas of relevance – the development of products that not only bring about fun, but also encourage interaction and promote learning. The mission of the company is stated as:

“JAKKS engages children in creative play with products that encourage learning and interaction, and most importantly – fun!” (JAKKS Pacific, 2018).

The company’s vision statement, in addition to indicating the entity’s ambition, also provides a framework for its strategic planning. Towards this end;

“JAKKS seeks to be a billion dollar company through organic growth of its core product lines, dynamic partnerships and strategic alliances, as well as through strategic and accretive acquisitions” (JAKKS Pacific, 2018).

The relevance of a clear vision and mission statement such as the one highlighted in the case of JAKKS Pacific cannot be overstated. The two statements above define the core business of JAKKS Pacific and state some of the company’s objectives and how it is likely to achieve them. The clear and concise nature of the declarations is in this case laudable.

3. Current Performance

3.1. Revenue

The revenues of JAKKS Pacific have been on a sustained decline within a three year period. With the company having registered a figure of 810 million as total revenue for the year 2014, the most recent financial data available indicates that the company posted revenues of 707 million in 2016. This represents a 12.7% decline (see figure 1.1). It is also important to note that over the last three years, the company has seen its share price sliced by more than half.

Figure 1.1: JAKKS revenues from 2014-2016

3.2. Debt to Equity Ratio

The company’s debt to equity ratio has also not been impressive over the last three years. This ratio, according to Moyer, McGuian, and Rao (2017), “measures the proportion of a firm’s total assets that is financed with creditors’ funds” (p. 78). During the three year period under consideration, the company’s debt-to-equity ratio stood at above 1. This, in essence, means that most of the assets of the company were funded using debt. Although a high debt to equity ratio is not necessarily a problem in some instances, in the case of JAKKS Pacific, the ratio raises eyebrows. This is more so the case given that prior to the three years under consideration, the company had maintained the said ratio under 1 (see table 1.2.). The increase in the ratio at a time the profitability of the company is suffering and its share price declining makes the company financially...

At this point in time, most creditors would find it risky to fund the company, effectively exposing the company to further decline.
Figure 1.2: JAKKS Debt to Equity Ratio from 2011-2016

4. Analysis of the Business Environment

In seeking to define and develop the appropriate strategy in any marketplace, the relevance of analyzing the business environment in which one operates cannot be overstated. This way, a business can measure a specific strategy’s chances of success. The best way to analyze JAKKS Pacific’s business environment would be through Porter’s Five Forces.

4.1. Competitive Rivalry

Some of JAKKS Pacific’s main competitors include, but they are not limited to, Mattel Inc., Hasbro Inc., and Marvel Entertainment, LLC. Mattel Inc. is the most dominant player in the toys market. One of its most popular products is its top seller, a fashion doll by the name Barbie (Mattel Inc., 2018). Other of its top sellers includes Matchbox Cars and Polly Pocket dolls. It is important to note that just like is the case with JAKKS Pacific, Mattel Inc has within the last the three years experienced a decline in sales, from 6.02 billion in 2015 to 5.43 billion in 2016. This represents a 9.42% slump (Mattel Inc., 2018). Hasbro Inc., on the other hand, occupies the number 2 slot in the toy market, after Mattel Inc. Some of its most popular brands are My Little Pony and Transformers. Like Mattel and JAKKS, the company also works with Disney in the production of some of the entertainment corporation’s brands (Hasbro Inc., 2018). Unlike its two main competitors, JAKKS and Mattel, Hasbro’s financials over a three year period have been impressive. The total revenue figure for the company in the years 2014, 2015, and 2016 was $4.3 billion, $4.4 billion, and $5.0 billion respectively. This represents a revenue growth of 17% over the three year period. Lastly, we have Marvel Entertainment Inc. The company has managed to protect its market share over time, thanks to some of its character’s marketability – with some of the best sellers in its stable being the Incredible Hulk, Spider Man, and Iron Man (Marvel Entertainment, 2018). The company also has a significant market share of the Commic Books Publishing Market.

From the analysis above, it is clear that JAKKS Pacific faces worthy competitors. However, the fact that the company makes a wide range of entertainment items for kids, including kids’ indoor and outdoor furniture, means that it does not face an immediate threat from competitors. Also, being a licensee to a number of popular trademarks including, but not limited to, Nintendo and Star Wars, JAKKS Pacific is still a key player in the toys and related products marketplace – despite the competitive nature of the said market.

4.2. Supplier Power

In essence, toys comprise of many parts and features. Further, there are numerous suppliers for the said parts. This effectively means that no single supplier occupies a dominant market position or is powerful enough to make switching costs prohibitive.

4.3. Buyer Power

This particular industry has low buyer bargaining power. This is more so the case given that traditionally, the toys…